This is a rush transcript from "On the Record," November 17, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST:Representative Michele Bachmann calls it "gangster government." She is talking about the Obama administration's controversial loan to the now bankrupt Solyndra. We spoke with Congresswoman Bachmann about Solyndra and her struggle to gain ground in the GOP polls.

VAN SUSTEREN: And I should say we're in a bar. We picked it, you didn't -- just so that everyone knows that you're not running around the bars in Iowa...

(LAUGHTER)

VAN SUSTEREN: ... that we picked this one.

BACHMANN: Look, I run around Iowa a lot these days, so I'm glad that we get to meet up here in Des Moines.

VAN SUSTEREN: OK. Good. All right. Well, a lot's going on. Let me first talk about Solyndra. Today Secretary of Energy Chu testified, and he said that -- he describes what happened with the Solyndra loan that the American taxpayers are on the hook for about over $528 million, is -- his words were "extremely unfortunate."

BACHMANN: Well, that's the understatement of the year. This is the height of crony capitalism. This is President Obama's political donors that he's paying off. And essentially, what the president did is he put one of his fund-raisers into the Energy Department to point out which of the loans should be made to which person that gave political donations to the president. Donations were made to companies like Solyndra, companies like LightSquared, companies like Beacon Power. And now there's a new one that came out, I think it's Seega.

This is really serious because you're talking over $500 million that are going out to companies that had no chance of being successful, and based upon a political donation. It's crony capitalism at its worst.

VAN SUSTEREN: Well, he said that the...

BACHMANN: You can't just say, "Oops, sorry."

VAN SUSTEREN: He said that the decision to give the loan to Solyndra -- and I assume he also meant the restructuring that was done which put the American taxpayer at the end of the line...

BACHMANN: Right.

VAN SUSTEREN: ... that the White House didn't pressure him.

BACHMANN: Well, but the point is, it was done because, again, what happened -- and I think it's important to point out what you just said -- there was a restructuring after the loan was already a failed loan and the United States took a lower position to get paid back first. That's unprecedented. And instead, the political donor of President Obama was put at the top of the heap so that they would be the first ones paid out. That's wrong.

Plus, it's also important to note that the wife of the person dealing with this loan was also representing the law firm of Solyndra. This is dirty in every single aspect, and it represents the very worst of Washington. But the worst of what President Obama is doing, which is crony capitalism, paying off political donors with taxpayer money or favors. That's what's wrong.

VAN SUSTEREN: Should Secretary of Energy Chu resign or be fired?

BACHMANN: Well, I think that he should resign, and I think that President Obama should fire him. I think this is clearly bad dealings, not just that loan, but other loans that are suspect. And you can't do that to the American people.

VAN SUSTEREN: You know, it's sort of interesting, the Republicans who are driving this, and also the candidates in the field who are, you know, raising hell about Solyndra, they're all talking about the crony capitalism. But even if you put the best look at it and assume that it wasn't crony capitalism, it was incompetent at best. I mean, it was a really a bad decision. I mean, no one's sort of look at, like, Well, you know...

BACHMANN: Incompetent or criminal.

VAN SUSTEREN: Well, yes, no, I'm saying -- well...

BACHMANN: It's criminal.

VAN SUSTEREN: Well, whatever. But I'm saying is that -- you know, is that the question of, like, you know, is it smart to have someone in the job who has made such a profoundly bad decision, assuming that it was done, you know, good heart and good mind? It was just a really bad decision.

BACHMANN: It was a really bad decision is exactly right. But it's the idea that this isn't just a one-time occurrence. If it was a one-time occurrence, you'd be very suspect. But it happened over and over.

And like LightSquared, that was a decision that was made to give bandwidth next to the GPS devices, and this has national security implications because with LightSquared, that is -- the GPS devices would be compromised for military aircraft and commercial aircraft. They could essentially go dark. And the Obama administration was pushing, giving this bandwidth to LightSquared at the detriment of commercial aircraft.

This is something that's very wrong, and it's the idea of picking winners and losers based upon political donations. That's criminal. I think that's criminal. It's morally and ethically bankrupt, but it's also criminal.

VAN SUSTEREN: All right, I use the term "criminal" very loosely, and so I want to at least make sure I understand how you use it. I say a lot of things are criminal. I mean, it might be criminal, you know, if I have to stand in line for six hours to get something, when clearly (INAUDIBLE).

But you know, are you using -- are you using "criminal" in a flip sense, or do you genuinely believe that there is a violation of the code, the criminal code, that this is a criminal violation?

BACHMANN: I genuinely believe that it's wrong, Greta, because...

VAN SUSTEREN: Wrong or a crime, a real crime?

BACHMANN: Well, that -- that would be up for people in Justice to make that decision as far as a crime because I certainly wouldn't be the one to bring it. But I do think there's something morally reprehensible that it rises to a level that has the president of the United States using the United States government for the purpose of paying off political donors.

That's gangster government. That's gangster government when you have a government pay off your political donors to pay off your debts. That's wrong.

VAN SUSTEREN: All right, the polls -- let's look at Iowa. You were the biggest, hottest thing last August. You won the straw poll. You had taken the state by the storm. Now you're -- you're -- at least by the polls, seem to be struggling. What happened? Or what are you doing?

BACHMANN: Well, I think a lot of it is a function of the media, which candidate is it that media follows, and then that candidate will tend to rise in the polls, kind of a self-fulfilling prophesy.

But I think, again, what we've seen is, almost like Wall Street has gone up and down on the stock market, no one has ever seen a political market like this, where the fortunes of candidates rise and fall.

My -- what I'm doing here in Iowa is exactly what I need to do. I'm meeting with people, just as I did before. And we're seeing the churn here in Iowa. We've had wonderful meetings with people all across the state.

And as people are looking at the candidate that is the most conservative and the most consistent candidate, I've been that candidate. I haven't had a gaffe or something that I've done that has caused me to fall in the polls. People see in me someone who's genuinely a social conservative, a fiscal conservative, a national security conservative and a Tea Partier. I'm the whole package.

And when it comes to the best Republican who take on Barack Obama and not have any clunker in my record to be able to take him on, it's me. And I've been involved as a private citizen for 50 years, and for the last five years, I've been in the lion's den in Washington, D.C. And so I have a record that I'm very proud of, and I'm happy to take him on in the debates to hold him accountable for what he's done to the economy and the country and our national security while he's been in office.

VAN SUSTEREN: So you're talking about clunker -- you mean the allegations -- underline allegations, no proof of Mr. Herman Cain that there were two women who said that they were sexually harassed, and you had the Governor Perry's unfortunate 53-second gaffe at the -- one of the debates -- is that the clunker that brings people down?

BACHMANN: Those clunkers show that people -- that that hurts candidates in the polls. I haven't had something like that. But what I've been...

VAN SUSTEREN: Well, you've had a few -- you've had a few little gaffes, maybe not recently, but you had the historic reference in Massachusetts, I think, and I think you had one...

BACHMANN: Well, I got Elvis Presley's birthday wrong, but I don't think that's a disqualifying factor for being president of the United States. What I did do is stand up loud and clear and I was the lone voice last summer when we were dealing with the debt ceiling, and I said, Let's pay off the interest on the debt today, but let's also prioritize our spending. Let's not do the Super Committee.

This Super Committee is giving us one of two very bad choices. One says, Let's raise taxes. Bad decision. I signed a pledge, and I think that means something, not to raise taxes. I said, Let's not raise taxes on the American people. It will hurt the economy.

But the other choice for the Super Committee is cutting $600 billion out of national defense. That's a terrible disaster. When the president has engaged our military in more venues than ever, Libya, Uganda, and now he's just made a decision to have 2,500 troops in Australia in addition to the work that we're doing in Iraq and Afghanistan, and in light of the report that came out from the IEA that Iran could be a nuclear power very quickly.

In light of that, to cut $600 billion out of our military in addition to the $400 billion, we're gutting the military. And according to Secretary of Defense Panetta, we're looking at shooting ourselves in the head when it comes to the military. That's a very bad decision.

And so what we need to do is this. We need to prioritize right now. We need to reform the entitlement programs right now. And we need to have a dramatic cut in the spending that we have. We're building up a welfare state. That's not helping our economy. We need to be a pro-growth economy, not a welfare state economy.

VAN SUSTEREN: You mentioned the Super Committee. And when -- when the Congress and president couldn't agree on a debt limit, a debt ceiling last August, the Super Committee was created, given until November 23rd to come up with a deal. In the event a deal doesn't happen, there's going to trigger where there'll be a certain number of cuts in the Defense Department and a certain number to the entitlements, and that will make a lot of Americans mad on either side. Republicans and Democrats across the country will been enraged.

That doesn't go into effect, though, until -- if we -- until January, 2013, after the election. Congressman Peter Welch last night agreed with me that that is so outrageous...

BACHMANN: It's outrageous. I absolutely...

VAN SUSTEREN: It's trying to hoodwink...

BACHMANN: Absolutely.

VAN SUSTEREN: Having it after the election.

BACHMANN: Absolutely. I absolutely agree. It's everything Congress does, everything the politicians do is kick the can down the road.

VAN SUSTEREN: It's not even kick the can down the road! It's to fool the taxpayers.

BACHMANN: Sure.

VAN SUSTEREN: I mean, it's one thing to delay and to do your homework late, but the fact is that they wanted all those cuts -- we're going to alienate Republican voter and Democratic voters, as well, but it's going to happen after the election so that the pain won't be taken out on the incumbents come November, whichever way you -- whichever way you fall on this, Republican or Democrat.

BACHMANN: And that's wrong, just like President Obama set the date for implementation of "Obamacare" until after the next election, and he also -- he kicked the can down the road on building the Keystone pipeline.

VAN SUSTEREN: Well, you say kick -- but you say kick the can down the road, it's, like, it's almost like...

BACHMANN: It is, though, Greta. It is kicking the can down the...

VAN SUSTEREN: It is, but...

(CROSSTALK)

BACHMANN: ... the impact of this bad decision won't be felt by the voter until they've already -- they've cast their vote at the ballot box. It's disingenuous. It's wrong.

(END VIDEOTAPE)

VAN SUSTEREN: Now, while we were in Iowa, we talked to Congresswoman Bachmann about her brand-new book, "Core of Conviction: My Story." It will be released on Monday, and you will see our interview with her on that book on Monday night. If you want to see more of tonight's interview, though, go to GretaWire.com, where you'll see the entire interview.